When U.S. Bank launched points transfers to airline partners less than a month ago, one addition caught my eye: Ethiopian Airlines ShebaMiles.
It got me wondering whether ShebaMiles could be the next non-U.S. airline program to make a bigger push into the U.S. points and miles market, following programs such as Avios, Aeroplan, LifeMiles, Flying Blue, Virgin Atlantic Flying Club, and Japan Airlines Mileage Bank.
Airline points and miles are a multibillion-dollar business and a reliable cash cow for carriers. Airlines sell billions of dollars’ worth of miles to banks and other partners every year, and during COVID, several pledged their loyalty programs as collateral to raise billions in cash. More recently, Air Canada sold a 25% stake in Aeroplan for C$2.5 billion.
The U.S. is by far the largest miles market globally, followed distantly by Brazil. Given how profitable selling miles can be, more and more non-U.S. airlines want a piece of that cash flow.
Domestically, the U.S. “Big Three” each pursue their own strategy, backed by a physical presence across the entire country. Foreign airlines, by contrast, have a much smaller footprint in the U.S., so they lean on miles sales and bank partnerships to generate cash and attract members from the world’s largest points and miles market.
Origins of the Non-U.S. Airline Playbook
The strategy was pioneered by British Airways Avios, under International Airlines Group (IAG), and later refined by LifeMiles after its parent airline, Avianca, joined Star Alliance in 2012. The formula included:
- Buy-miles promotions
- Bank transfer partnerships and promotions
- Intentionally curated redemption “sweet spots” to generate word-of-mouth buzz, particularly for partner redemptions
- Change, cancellation, and partner-redemption fees as additional revenue streams
Other non-U.S. and regional carriers later adopted a similar model to attract members outside their home markets. Air France-KLM’s Flying Blue and Air Canada’s Aeroplan are chief among them, particularly because the U.S. market dwarfs their home markets in size.
COVID as a Turning Point
When COVID hit, people stopped traveling and airlines across the industry were suffering. Several major airlines turned to their loyalty programs as collateral to raise billions in cash, making the value of these businesses impossible to ignore.
Virgin Atlantic Flying Club is a prime example of how programs have evolved since then. In just a few years, it transformed from a currency centered largely around Virgin Atlantic flights into one of the more prominent programs in the space by expanding bank transfer partnerships, joining SkyTeam, launching online partner redemptions, and shifting to dynamic pricing on its own flights and select partners.
As a side note, Alaska Airlines’ Atmos Rewards program took a slightly different path. Still U.S.-based and historically regional, it broadened the program’s appeal by pairing a highly competitive elite program on the West Coast with a unique co-brand credit card, a broad range of airline partners, and other benefits that extend beyond Alaska’s traditional footprint.
The Next Movers
More recently, the spotlight has shifted to Japan Airlines Mileage Bank, which has added partnerships with Bilt, Capital One, and most recently Citi.
Now, it may be Ethiopian Airlines ShebaMiles’ turn. The program has already checked several boxes:
- Star Alliance membership
- A website supporting partner redemptions
- Buy-miles promotions
- Its first U.S. bank partnership
If ShebaMiles continues following the playbook used by programs such as Avios, LifeMiles, Aeroplan, Flying Blue, Flying Club, and JAL Mileage Bank over the past 15 years, I think there are several likely next moves:
- Creating/Maintaining a few redemption sweet spots to generate buzz, potentially while continuing to use an award chart for the time being
- Adding more bank partners with attractive pricing for those partners, potentially below 130 basis points per mile
- Launching bank transfer promotions
- Introducing multi-tier and eventually dynamic redemptions on Ethiopian’s own flights, with some inventory reserved exclusively for ShebaMiles members rather than relying on the current single-tier, inventory-based system
- Improving customer service and adding online changes, or at least cancellations, paired with change and cancellation fees
- Adjusting fees over time as members become more familiar with the program
Africa has also become an increasingly popular destination in recent years. I’ve personally visited the continent six times over the past 15 years and traveled through about half of it.
There are very few places Ethiopian Airlines doesn’t fly across Africa today, apart from some North and Southern African markets served by partners such as EgyptAir and Airlink. That’s the result of a network Ethiopian began building years ago.
Sure, United MileagePlus, Air Canada Aeroplan, and Turkish Miles&Smiles can already be used to book Ethiopian flights, but those programs only have access to the award inventory Ethiopian makes available to partners.
If ShebaMiles eventually introduces multi-tier redemptions on Ethiopian’s own flights, with additional inventory reserved exclusively for its own members, that could become a real competitive advantage.
U.S. customers would have another option when choosing a miles program, and I’ve never been more bullish on the future of this industry as more banks and programs enter the market.
And with ShebaMiles becoming more relevant in the U.S., we’ve added the program to PointsYeah Live Search, making it possible to search ShebaMiles award availability alongside other supported programs.
